By Linda Crow
The new Corporate Insolvency and Governance Bill will introduce new provisions to protect a company from suppliers wishing to terminate supply contracts or invoking more draconian terms when the company is entering into certain insolvency procedures, a CVA, or a new restructuring plan or moratorium (as introduced by the Bill), (each an “Insolvency Procedure”).
The purpose behind the new provisions is to maximise the possibility of a company being rescued or being able to sell its business as a going concern by helping it to trade through an Insolvency Procedure.
Where a company (the customer) becomes subject to an Insolvency Procedure, the supplier will be prohibited from: Continue reading “UK Corporate Insolvency & Governance Bill: Termination Clauses & Temporary COVID-19 Relief”
By Linda Crow
Last week the UK government introduced the Corporate Insolvency and Governance Bill in Parliament.
The main objective of the Bill is to provide businesses with the flexibility and space needed to continue to trade during this difficult time caused by the COVID-19 pandemic. That said, the provisions around the new moratorium and the new restructuring plan proposal have been under consideration for a few years.
The Bill’s measures can be split into three categories:
- Those that provide greater flexibility, allowing companies protection from creditor action and safeguarding supplies whilst it explores options for rescue.
- Temporary suspension of parts of insolvency law to support directors continuing to trade during the crisis without threat of personal liability and to prevent aggressive creditor action.
- Temporary extension of certain times for filing documents at Companies House and temporary relaxation of strict compliance with constitutional requirements relating to corporate meetings (including AGMs).
The insolvency measures are: Continue reading “Prompted By COVID-19: The UK Government Introduces Corporate Insolvency & Governance Bill”
By Linda Crow
On 14 May 2020, the UK Government extended the temporary suspension of wrongful trading liability until 30 June 2020.
On 28 March this year, the Government announced that it would “at the earliest opportunity“ introduce legislation, retrospective to 1 March 2020, to relax the insolvency rules which can make directors of limited liability companies potentially liable if they continue to trade and incur liabilities when they knew or ought to have concluded that there was no reasonable prospect of avoiding an insolvent liquidation or administration.
The relaxation of the wrongful trading rules is to give directors confidence to do all that they can to continue trading during the pandemic emergency, knowing that they have no threat of personal liability should the company subsequently fall into an insolvency procedure.
The current laws relating to fraudulent trading and directors’ disqualification continue in full force and effect. Continue reading “COVID-19: Insolvency & The UK Gov’s Temporary Suspension of Wrongful Trading Liability”